Presentation to the Portfolio Committee on Labour

Parliament of South AfricaFriday 12 September 2014

Social Law ProjectVision

A South African society with a constitutional order, and a regulatory and institutional framework providing for empowerment and effective implementation of the rights of all working people, including non-standard workers

Mission: To strengthen the movement for social and workplace justice through knowledge production that enhances institutional capacity and facilitates dialogue.

Presentation OutlineSocial Context

Constitutional imperatives

Legislative Context

Minimum Wages

The value of work

The national minimum wage – the human development approach

Towards a national minimum wage – some issues

ContextHigh levels of inequality and poverty

high levels of poverty and inequality between population groups

Racial, gender and age dimensions – African women most vulnerable

According to OECD inequality amongst highest in world

Gini co-efficient (2011) -0.69Richest 20% consume 61%; bottom 20%

consume 4.5%45.5% classified as poor – 23 million

Context Contd.

High level of unemployment Unemployment rate 25.2%, among the highest

in the world, second in the Medium Developed Group of countries, after xxxxxx

Lack of social cohesion – high levels of public protest, high levels of strike action

Constitutional ImperativesHuman dignityProtection against unfair discriminationFreedom of expression and associationFair labour practices Right to organise and bargain

collectivelyAccess to social security including social

assistance

Legislative Framework

Labour Relations Act (LRA)Purpose:

To give effect to constitutional rightsTo give effect to ILO obligationsTo provide framework for bargaining on wages

and other terms and conditions of employmentTo promote orderly collective bargaining

Legislative FrameworkLabour Relations Act (LRA)Four pillars for achieving the purpose of the LRA: Organisational rightsVoluntary collective bargainingWorkplace and Bargaining Council Collective AgreementsRight to strike and recourse to lock-out

• Total 7.2 million economically active employees : LFS grades 4-9• Councils in 8/9 industrial classifications (LFS)• 2,3 million (32%) employees covered by bargaining councils• 335, 000 ( 5%) covered by extended agreement

(Godfrey et al 2010)

Legislative Framework

Basic Conditions of Employment Act(BCEA)PurposeTo provide for and enforce basic conditions of employmentTo provide for sectoral determinations by the Minister of Labour, in respect of employees and employers not covered by bargaining council collective agreement

Legislative FrameworkBasic Conditions of Employment Act(BCEA)Sectoral DeterminationsForestryAgricultureContract CleaningTaxi OperatorsCivil Engineering ( Bargaining Council now registered)Private SecurityDomestic WorkersWholesale and RetailHospitality

LearnershipsChildren in performing arts, advertising etc

Under investigation:BuildingFuneral

Legislative FrameworkBasic Conditions of Employment Act (BCEA)Employment Conditions Commission

The ECC must take the following into account when making recommendations to the Ministerthe ability of employers to carry on their business successfullythe operation of small, medium or micro-enterprises, and new enterprisesthe cost of livingthe alleviation of povertyconditions of employmentwage differentials and inequalitythe likely impact of any proposed condition of employment on current employment or the creation of employmentthe possible impact of any proposed conditions of employment on the health, safety or welfare of employeesany other relevant information made available to the Commission.

BCEA - Section 54(3)

Minimum Wages: Sectoral DeterminationsSector Min per hour Min per day

(9 hour day)Min per month

Domestic Work 8.30 74.70 1618.37

Security Officer 11.74 - 2441.00

Forestry 10.94 98.46 2229.32

Farm 12.41 111.69 2420.41

Contract Cleaning 14.19 127.71 2764.92

Hospitality 12.39 111.51 2415.86

Taxi 10.61 95.49 2113.11

Wholesale & Retail 13.16 118.44 2556.30

Civil Engineering 20.50 184.50 3999.42

EPWP (Ministerial Determination) 8.82 70.59

Source : COSATU Organising Department, 2014

Minimum Wage by Sectoral Determination

Minimum Wages: 2012 Wage Agreements and Sectoral Determinations: Median Wages

Standard Industry Classification Number of bargaining

units

Estimated number of workers

Median Minimum Wage

Agriculture, hunting, forestry and fishing

37 886 047 1614

Community, social, and personal 22 1 130 149 4325

Financial intermediation, insurance, real estate…

111 207644 2755

Manufacturing 453 521 896 3578

Construction 24 151 284 2731

Mining and quarrying 80 217 577 4743

Transport, storage and communication

30 212 596 4778

Wholesale and retail 179 570 967 2782

Electricity, gas and water 3 38 641 7293

Total 939 3 936 801 3500

Source : Labour Research Service, 2013

Minimum Wages: 2012 Wage Agreements and Sectoral Determinations: Median Wages

Minimum Wages: 2012 Wage Agreements and Sectoral Determinations: Median Wages

Sectoral Determination

2260

Bargaining Council 3319

Decentralised (Non-statutory)

3979

All Industry 3500

Source: Labour Research Service, 2013

Minimum Wages: 2012 Wage Agreements and Sectoral Determinations: Median Wages

The Value of Work

ILO Decent Work AgendaConcept and goals

Work a source of income and personal dignityJobs of acceptable qualityImproved social protectionPromotion of social dialogue and tripartism

Country programme agreed in NEDLAC“ Urgent need for national consensus on what constitutes a

minimum wage and minimum level of living sufficient to meet the Constitutional guarantee of life and dignity and the need to

develop wage policy on this basis” (SA Decent Country Work Programme, 2010, at page 8)

The Value of WorkGuiding concept“…work is valued for multifaceted reasons and serves

multifaceted functions, some of which are clearly economic (understood in a restrictive sense of value added and remuneration) and many of which are not. It is in this range of values and functions, both economic and social, that we must seek to understand the place of employment within human development.” (Fischer: 2014 p4)

The Value of WorkSocial & Economic Value In taking this position forward, in the exploration of a

NMW, we would argue that it should locate itself within this range of functions. In support of Fischer’s argument, “A vital role of public policy within development is to strengthen progressive redistributive institutional mechanisms as means to cultivate resilience and positive synergies between social values of employment, and human and economic development.” (Fischer: 2014 p6)

The Value of Work

Work as promoting wellbeing“Occupational justice argues for society

where people can develop their potential to participate fully in life, not just fit pre-established work roles” (Ross, 2007)

Occupations – as what “occupies” time, energy and resources has influence on wellbeing and Human Development

To what extent can domestic work be repositioned to promote wellbeing for all

workers?

The Value of WorkHuman DevelopmentThe human development approach is a fundamental shift

from market domination with its trickle-down effect to a more direct investment in human capital as the most valuable asset of any society. At its core, human development strategies are expected to result in a lower incidence of poverty and a greater degree of equality.

By bringing a human development perspective to existing initiatives, government can consolidate and bring coherence to its projects and programmes and explore and identify new ways of optimizing human development.

The Value of WorkMeasuring Human Development

The Human Development Index

The human development index (HDI) is a composite measure that combines 3 dimensions:

Health Education Living Standards

0 = Extreme Poverty & Inequality Prosperity & Equality = 1

The Value of WorkInequality-adjusted Human Development (IHDI)IHDI measures the “loss” in potential human development due to inequality. The global average loss is approximately 22%. The country with the highest HD, Norway, had a loss of 6.6%, while the country with the lowest HD, Zimbabwe, had a loss of 29.9%. South Africa, as a medium developed country, has a disproportionately high (31.2%) loss in potential HD, due to its high levels of inequality.

The Value of WorkOccupational injusticeDomestic work not valued in comparison to

other labourThe way work is constituted does not respect

personhoodDomestic workers at risk of depression

because of the way that work “occupies” Minimum wage as opportunity to afford

respect for what domestic workers do and defining realistic work expectations

A summaryPatchwork of overlapping bargaining councils, workplace

bargaining and sectoral determinations – issue of representivity

No coherent wage policy to undo apartheid legacyIncreases levels of informal and unregulated workCompliance and enforcement problemsHigh levels of inequality and povertyGrowing wage gap

Why a national minimum wage

Bridging the Wage Gap?

Why a national minimum wageContribute to reducing income inequality and

povertyAddress existing wage fragmentation by way of

uniform coverageProvide protection to vulnerable workersSimple and easy to understand and enforceServe as foundation for improvements to

employment conditions through collective bargaining

Towards a national minimum wage: Recommendations

Foster public consensus on the concept including how figure is to be determined. Much work done already through institutes like SPII

Develop a wage policy as part of Decent Work ILO programme Locate national minimum/a within overall wage frameworkA new collective bargaining model ?

o Coherent demarcation of sectors o Greater state support to NEDLAC, statutory and non-statutory

bargaining fora, better equipped inspectorate etco New section 55(8) – Minister can be supportive of establishing a forum

“for employers and employees who are not covered by any other sectoral determination”

o Unpack levels of bargainingo Must move beyond the existing coverage of “standard employees”.

National Minimum Wage

A Cog in the Wheel of

Human Development